Another bank fraud case in gems & jewellery industry: ED slaps highest ever FEMA notice on jewellery firm

After completing an over year-long investigation and under various sections of the Forex law, the highest ever FEMA show-cause notice has been issued today.

In a major incident of a bank loan fraud case, the Enforcement Directorate (ED) slapped an unprecedented Foreign Exchange Management Act (FEMA) show cause notice of Rs 7,220 crore on a Kolkata-based jewellery house. The notice has been issued to Shree Ganesh Jewellery House (I) Ltd and its promoters for allegedly indulging in illegal foreign exchange abroad, PTI reported citing official sources. According to the report, the firm is among the top 100 wilful bank loan defaulters in the Reserve Bank of India list. The ED had also filed a money laundering case against the firm and its promoters in 2018 for cases related to bank frauds.

After completing an over year-long investigation and under various sections of the Forex law, the highest ever FEMA show-cause notice has been issued today. The ED has charged the firm under the FEMA for resorting to unauthorised foreign exchange dealings, holding of foreign exchange outside India, and willful siphoning off a whopping amount of Rs 7,220 crore as export proceedings. At present, the firm’s three promoter brothers – Nilesh Parekh, Umesh Parekh, and Kamlesh Parekh – are also being probed by CBI and ED. Earlier, the firm was allegedly defrauding a consortium of 25 banks to the tune of Rs 2,672 crore by availing credit facilities in the form of working capital loans and discounting of export bills.

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Meanwhile, the gems & jewellery industry has already been facing trust issues with the banks after the Nirav Modi and Mehul Choksi PNB fraud case in 2018. As banks are reluctant to give credit to the gems & jewellery sector, the industry is struggling with liquidity issues. Adding to the woes, the coronavirus-led lockdown has hammered the industry as jewellery shops were shut down and the job loss and uncertainty in the market pulled down the demand. Further, today’s FEMA notice has come as another nail in the coffin for the gems & jewellery industry.